“The projected losses also reflect an assumption that from the first quarter of 2009, home prices will fall an additional 12.5% nationally and 36% in California, with home prices not exhibiting stability until the second half of 2010.”
Calculated Risk quoting Fitch Ratings
“According [to] the Fed, household net worth is now off $14 Trillion from the peak in 2007.”
That’s a loss of about $116,000 per household (more or less).
According to this story in the Los Angeles Times housing values in some parts of Southern California have dropped below 1989 values.
To return to the past, take a stroll down Mulberry Avenue in Lancaster. John A. Beatrice, 55, bought his spacious two-story Spanish-style house there brand-new for $120,000 in 1989. It was a price he could comfortably afford, and he planned on staying through retirement, so he wasn’t worried about price swings.
. . .
But he never imagined his neighborhood would drop off the charts. In April, a slightly larger home two doors away sold for $66,500. That’s just over half the $130,000 it went for new in 1992. In 2005, that house sold for $330,000.
Beatrice’s 29-year-old daughter is now shopping for Lancaster houses priced lower than when she was a kid.
Should you pay a little extra upfront in hopes of saving money — or hassle — in the future? Or are you better off spending less and pocketing the savings now?
From warehouse clubs to home and car maintenance, we present you with ten situations for you to decide. Is it worth the cost? Or should you save your money? Take our quiz to find out.
Not much new in this quiz from Kiplinger, but interesting nonetheless.
Number of banks closed 2003: 3
Number of banks closed 2004: 4
Number of banks closed 2005: 0
Number of banks closed 2006: 0
Number of banks closed 2007: 3
Number of banks closed last year: 25
Number of banks closed so far this year: 37
Number 37, the Bank of Lincolnwood in Lincolnwood, Illinois, was closed by the FDIC on Friday.
Call this the rule of law, or protection against being expropriated, or sufficient constraints on executive power, but it adds up to roughly the same thing. We strongly limited the power of the most powerful in our society – and this is in striking contrast to what happens in much of the rest of the world.
But over the past 20-30 years, we took our eye off this ball.
Simon Johnson with a quick historical look at power and the rule of law.
Recommended — and it’ll just take you two or three minutes.
Note that the unemployment rate has risen sharply for all categories in 2009. For “less than a high school diploma” the rate has increased from 9% in [2008] to almost 16% in May.
Education matters!
Calculated Risk has the graph.
“A record 12 percent of homeowners with a mortgage are behind on their payments or in foreclosure as the housing crisis spreads to borrowers with good credit.”
“Since the end of the 2001 recession, house prices have failed to keep up with inflation.”
According to Consumerist:
CVS stores across the nation regularly stock expired medicine, milk, and baby formula, according to a damning union report. This isn’t the first time CVS has been caught stocking dangerous goods. Last year, New York Attorney General Andrew Cuomo threatened a suit after his office caught the pharmacy selling goods over a year past their expiration dates. CVS claims that, despite investing over $160 million in a “perpetual inventory management” system, it’s nearly impossible to keep expired items off the shelf because they simply have too much stuff.
A CVS store is opening near me very soon. It will be interesting if I find expired products in the brand new store.
“The Consumerist is published by Consumer Media LLC, a not-for-profit subsidiary of Consumers Union, and takes no outside advertising.” In other words, it’s from the same people who publish Consumer Reports, only decidedly less stuffy.
“I mean, the level of morals here is astonishing. In my entire life I’ve never met a drug dealer who would even think about trying half the shit that banks like Goldman Sachs and Citibank pulled during these years.”
Matt Taibbi in a must-read post, “Don’t pin the recession on AIG’s Joe Cassano.”
Michael Lewis reviews The Snowball: Warren Buffett and the Business of Life. An excellent and telling review.
States with the highest foreclosure rates in April were Nevada, Florida, California, Arizona, Idaho, Utah, Georgia, Illinois, Colorado and Ohio.
Rate means number of foreclosures per thousand households. Nationwide, one in every 374 households received a foreclosure notice in April. It was one in every 68 in Nevada, 135 in Florida, 138 in California and 164 in Arizona.
One in every 1,209 households in New Mexico received a foreclosure notice in April (the state was 33rd).
There were 342,038 notices nationwide last month.
You know that the Bank of America is in the news today for being in need of $34 billion in shoring up.
Today also is the birthday of the Bank’s founder, Amadeo Pietro Giannini (1870-1949), a hero of the 1906 San Francisco earthquake.
Like a lot of folks in the San Francisco area, Amadeo Peter Giannini was thrown from his bed in the wee hours of April 18, 1906, when the Great Quake shook parts of the city to rubble. He hurriedly dressed and hitched a team of horses to a borrowed produce wagon and headed into town — to the Bank of Italy, which he had founded two years earlier. Sifting through the ruins, he discreetly loaded $2 million in gold, coins and securities onto the wagon bed, covered the bank’s resources with a layer of vegetables and headed home.
In the days after the disaster, the man known as A.P. broke ranks with his fellow bankers, many of whom wanted area banks to remain shut to sort out the damage. Giannini quickly set up shop on the docks near San Francisco’s North Beach. With a wooden plank straddling two barrels for a desk, he began to extend credit “on a face and a signature” to small businesses and individuals in need of money to rebuild their lives. His actions spurred the city’s redevelopment.
That would have been legacy enough for most people. But Giannini’s mark extends far beyond San Francisco, where his dogged determination and unusual focus on “the little people” helped build what was at his death the largest bank in the country, Bank of America . . .
Most bank customers today take for granted the things Giannini pioneered, including home mortgages, auto loans and other installment credit. Heck, most of us take banks for granted. But they didn’t exist, at least not for working stiffs, until Giannini came along.
“The truth is these mega-banks invested trillions, made billions, and took risks with their eyes wide open. Now, because they are deemed ‘too big to fail,’ they need trillions in government bailouts and guarantees to solve problems they helped create. But let’s look at it another way: perhaps these mega-banks are simply ‘too politically connected to fail.’
Bill Buzenberg, executive director Center for Public Integrity
Via Calculated Risk.
“Even students at Hollister’s San Benito High School wonder if they are violating Abercrombie & Fitch’s trademark by wearing shirts emblazed with the school nickname, the Hollister Haybalers.”
Good article from the Los Angeles Times on corporate overreach.
Welcome to the original Hollister, Calif., incorporated in 1872, birthplace of American biker culture and inspiration for the 1953 film “The Wild One,” starring Marlon Brando.
It’s nothing like the mythical Hollister known to teenagers — an idyllic Southern California beach town that is portrayed in more than 500 clothing stores across the country, Canada and the United Kingdom.
That’s a myth created and cultivated by Abercrombie & Fitch, the Ohio clothing giant that started the hugely popular Hollister Co. surf-wear line in 2000.
“I do worry that our policymakers think the foreclosure problem underlying the financial crisis is basically over. If so, they’re wrong. Very wrong.”
Atrios explains. Fascinating chart.
Bank Failure 30: Silverton Bank, National Association, Atlanta, Georgia
Bank Failure 31: Citizens Community Bank, Ridgewood, New Jersey
Bank Failure 32: America West Bank, Layton, Utah
Another busy Friday for FDIC. Many, BTW, thought that Silverton Bank was a bank too big to fail. It’s a bank whose only customers are other banks. Its failure — and no bank stepped up to take it over — is expected to cost FDIC (that would be us, because the banks are seeing to it that their FDIC premiums are not increased) $1.3 billion.
Number of banks closed last year, 2008: 25
Number of banks closed previous eight years, 2000-2007: 26
“With its survival, at least in the short term, so dependent on public assistance, it seems fair to ask, do we need a domestic auto industry? Many American manufacturing industries, like textiles and electronics, long ago moved to other producing countries. Why is the auto industry different?”
Four economists respond to the question. It’s more interesting than it sounds.
According to a paper on financial literacy, only 7% of the American people answer this question correctly:
You purchase an appliance which costs $1,000. To pay for this appliance, you are given the following two options: a) Pay 12 monthly installments of $100 each; b) Borrow at a 20% annual interest rate and pay back $1,200 a year from now. Which is the more advantageous offer?
(i) Option (a);
(ii) Option (b);
(iii) They are the same;
(iv) Do not know;
(v) Prefer not to answer.
Source: Felix Salmon, who argues the correct answer may not be the most appropriate choice.
Answer in comment.
“Phoenix home prices fell 35 percent from February 2008 to February 2009…”
“Phoenix home prices are down 51 percent from their peak.”
A lot of people have to have a lot more mortgage than house.
Worst six months for the U.S. economy since 1958.
Gross Domestic Product down at an annual rate of 6.1% in the first quarter of 2009, after a 6.3% drop in the last quarter of 2008. (See below.)
But there is this optimistic quote from an article in The New York Times: “We’re still declining, but we can see the forces that will get us out of this.”
Well, except that the comment comes from Markus Schomer, “global economic strategist at AIG Investments.”
Why on earth would anyone quote somebody from AIG?
The same article also says, “Earlier this week, General Motors announced it would slash another 21,000 jobs in the United States.” And once again, no mention is made of the more than 100,000 workers expected to lose their jobs just from GM closing 2,600 dealers. I guess those people don’t count. Ten here, twenty there, forty here. Ain’t no thing.
GDP change year-to-year:
2008 1.1
2007 2.0
2006 2.8
2005 2.9
2004 3.6
2003 2.5
2002 1.6
2001 0.8
2000 3.7
1999 4.5
1998 4.2
1997 4.5
As you can see, in a healthy economy the GDP grows about 3% on average each year. The current rate of negative 6% then is even worse than it seems.
The GDP dropped 10.4% in the first quarter of 1958 after dropping 4.2% the last quarter of 1957 (on an annualized basis); but it was down only 1.1% for the entire year 1958, however, due to a strong recovery. It seems reasonable to expect that 2009 could be the worst calendar year since 1946, when the U.S. came out of the war economy and GDP dropped 11%.
From the FDIC: Failed Bank List, the number of failed banks 2003-2008:
2003: 3
2004: 4
2005: 0
2006: 0
2007: 3
2008: 25
This year, through April 17th, there had also been 25 closings. Yesterday there were four more:
26. American Southern Bank, Kennesaw, Georgia
27. Michigan Heritage Bank, Farmington Hills, Michigan
28. First Bank of Beverly Hills, Calabasas, California
29. First Bank of Idaho, FSB, Ketchum, Idaho
There are 35 more Fridays in 2009. (The FDIC acts on Friday to have the weekend to get things squared away.)
By the end of next year.
From The Huffington Post.
Among the 12: Borders (1971), Crocs (2002), Old Navy (1994) and Chrysler (1925).
Chrysler is likely to disappear next week.